Kevin Drum

Greece Is Just a Few Days Away From Unconditional Surrender to Germany

| Wed Jul. 1, 2015 1:24 PM EDT

Apparently the Greek prime minister is blinking:

In a letter sent on Tuesday to the creditors — the European Central Bank, the International Monetary Fund and other eurozone countries — Mr. Tsipras said Greece was “prepared to accept” a deal set out publicly over the weekend by the creditors, with small modifications to some of the central points of contention: pension cuts and tax increases. In the letter, released publicly on Wednesday, Mr. Tsipras linked Greece’s acceptance of the terms to a new package of bailout aid that would need to be negotiated.

The development initially raised the prospect of progress in resolving a financial crisis that has sent shudders through global markets and deeply strained European unity. President François Hollande of France called for talks in the hopes of getting a deal by the weekend, saying, according to Agence-France Presse: “We need to be clear. The time for a deal is now.”

But other European leaders, fed up with Mr. Tsipras and in no mood for quick compromise, dashed any hopes of an immediate breakthrough.

Chancellor Angela Merkel of Germany responded by repeating her position that there should be no further negotiations until Greece holds the referendum on Sunday.

In other words, Merkel is not even willing to grant Tsipras a few meaningless face-saving concessions. Why? I think Merkel believes she now holds all the cards and has no reason to make any concessions at all, no matter how small. And I suspect she's right. In the end, the Greek public will be unwilling to back Tsipras in Sunday's referendum and will vote to accept the European deal as is. The potential catastrophe of default and leaving the euro is just too scary for most of them to contemplate.

So Tsipras will be out and Europe will effectively have total control of Greek finances. After six months of cage rattling, the Greek revolt will be over and future governments will simply have to accept whatever pain Merkel wants to deal out. At that point, with Tsipras gone, it's actually possible she'll agree to a few concessions here and there. Policy issues aside, there's little doubt that Merkel's personal contempt for Tsipras has done a lot to cement her hard line toward Greece.

So that's my prediction. Unless Tsipras caves completely beforehand, the referendum will be held on Sunday and Greeks will vote to stay in the euro and accept Germany's terms. It will basically be an unconditional surrender.

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Santorum Holding Onto Debate Stage By His Fingernails in Latest CNN Poll

| Wed Jul. 1, 2015 12:03 PM EDT

Fox News will be sponsoring the first Republican debate on August 6, and they have decided to limit the stage to the top ten candidates. The lucky winners will be the ones who "place in the top 10 in an average of the five most recent, recognized national polls leading up to Aug. 4."

So how is everyone doing so far? CNN is certainly a recognized national poll, so they'll be part of the eventual winnowing. And their most recent poll shows Jeb! at the top followed by Trump, Huckabee, Carson, and Rand Paul. The bottom three candidates—Christie, Cruz, and Santorum—could easily lose a point or two just due to statistical churn, to be replaced by Jindal, Kasich, and Fiorina.

I'm looking forward to the Trump-Christie showdown for the Annoying Loudmouth Award, and to the Carson-Cruz showdown for the Looneybin Award—though both men have been disappointingly circumspect lately, hedging their beliefs as if they really wanted to win this thing.

But there's still a chance of Rick Perry melting down in amusing fashion. That should make the whole thing worth watching.

Atlanta Fed Says Workers Finally Benefiting From Recovery

| Wed Jul. 1, 2015 11:17 AM EDT

Here's some potentially good news. There are various way of tracking wage growth (with or without benefits, employer survey vs. worker survey, nonsupervisory vs. everyone, etc.), and the Atlanta Fed has introduced a new wage index constructed from the Current Population Survey. In theory, this should provide reliable data with a large sample size and will be available monthly. The good news is that their index shows nominal wage growth increasing at a fairly healthy 3.3 percent per year:

Wage growth by this measure was essentially unchanged from April and 1 percentage point higher than the year-ago reading. The current pace of nominal hourly wage growth is similar to that seen during the labor market recovery of 2003–04 and about a percentage point below the pace experienced during 2006–07, which was the peak of the last business cycle.

Other wage measures will be released later this week. With inflation still well under control, this is good news for workers, and potentially bad news for Fed watchers, who hope they won't use it as an excuse to raise rates. We'll see.

Jeb Bush's Finances Could Spell Trouble For Him in the GOP Primaries

| Tue Jun. 30, 2015 5:55 PM EDT

Jeb Bush is in big trouble:

Since leaving the Florida governor’s office in 2007, Jeb Bush has made about $29 million, a considerable increase in his personal wealth since reentering the private sector....The documents show he paid an effective tax rate of more than 36 percent each year since leaving the governor’s office, according to his campaign.

That's it? $5 million per year? And he was lame enough with his finances to hand over 36 percent to Uncle Sugar? What the hell kind of business-oriented Republican does he think he is? You could make that much working for a bunch of do-gooder charity operations like some starry-eyed Democrat.

Jeb better have a good explanation for this. Otherwise he might not make it out of the primaries.

Did Republicans Ever Think They Really Had a Chance of Winning King v. Burwell?

| Tue Jun. 30, 2015 2:08 PM EDT

Today, Harold Pollack wins the award for....um, something. Best geek-obsessive amateur polling and chartmaking of 2015? Whatever, it's really impressive. Man, I wish I had done this.

So here's what he did: Last week, before the Supreme Court's Obamacare decision was announced, Pollack asked an "elite group of health policy and legal experts" to give their predictions. Who would win? The plaintiffs or the government? He got replies from over 40 people, about three-quarters of them Democrats. With the obvious caveat that this is a nonrandom, nonscientific sample etc. etc., here's what he found:

Although Democrats and Republicans had wildly different views of who should win, the distribution of predicted probabilities of a plaintiff victory was surprisingly similar between the two groups. Amazingly, Cato’s Michael Cannon and I offered identical prior predictions—20% probability of plaintiff victory.

Among Democrats, the median predicted probability of plaintiff victory was 40%. Among Republicans, the median was 37.5%.

Pollack has a different takeaway from some of this than I do, and you should read his post for more. But I have a different point to make. Before the decision was handed down, I noticed that in public an awful lot of experts seemed to be assuming a plaintiff victory. Conservatives were adamant that they had a slam-dunk winning case. Liberals, for their part, increasingly seemed to be in tacit agreement thanks to their pessimism about the cynicism of the Roberts court. At a guess, if you were a visitor from Mars perusing blogs and op-ed columns, you'd assume that most people thought the plaintiffs were going to win.

And yet, behind the scenes that wasn't the case. In private, even Republicans thought victory for the plaintiffs was unlikely.

So here's what we have in this case. In public, Republicans were sticking with confident assertions that the case was a winner on plain textual grounds. Democrats, in public, were becoming more and more resigned to a conservative victory.

And what does the public take away from all this? All we can do is guess, but I'd say most of them figured the plaintiffs had the better case. After all, both sides seemed to think so. This makes it pretty easy to generate a serious sense of outrage when, in the end, the plaintiffs lost after all.

The lesson conservatives taught us here is simple: Never let them see you sweat. Insist to the bitter end that you obviously have the better case. That's good politics. For one thing, it might actually give you a better chance of winning. And even if it doesn't, it makes it easier to maintain public outrage when you lose. In this case, conservatives did a pretty good job of wringing every possible advantage they could out of King v. Burwell.

Managers of America, Unite! You Have Nothing to Lose Except Straight Time for 60 Hours of Work a Week

| Tue Jun. 30, 2015 12:21 PM EDT

If you're paid 12 bucks an hour, you're not making much. But hey—at least you're eligible for overtime. Hooray! Federal law dictates that you be paid time-and-a-half for working more than 40 hours in a week.

But wait. You work at McDonald's and you're a "supervisor." Under the current opaque and complicated rules adopted a decade ago by the Bush administration, that means you're management. No overtime for you. Sorry.

That wage amounts to about $23,000 per year, and if that seems a little stingy for a manager, you're right. Way back in 1975, the Ford administration set the wage level to qualify as management at $6.25/hour, and if you adjust for inflation that amounts to about $28/hour today, or $56,000 per year. For most of us, that's intuitively a little closer to the wage we think a real manager makes.

Well, good news. Today, after years of arguing and rulemaking, the Obama administration raised the wage level at which the "management exemption" comes into play. It's a little less than the inflation-adjusted figure from the Ford administration, but it's close. The new level is $970 per week, or about $50,000 per year. Anyone paid less than that, even if they have supervisory duties, qualifies for overtime pay. What's more, future increases are pegged to the level of inflation, so the rules will keep up with reality even when Republicans are in office.

Naturally, the folks who benefit from the old rules are threatening havoc. Check this out:

The National Retail Federation, a business group, says its members would probably respond by converting many salaried workers to hourly status, which could cost them benefits such as paid vacation. Other salaried workers would have their hours cut and wouldn’t receive higher pay. Businesses might hire additional workers to avoid paying overtime or extend the hours they give part-timers. Yet supporters of extending overtime coverage say they would welcome those changes.

Charming. Of course, we've heard this before in other contexts—remember all those millions of workers who were supposedly going to be cut from 30 hours a week to 29 to avoid giving them health insurance under Obamacare?—and most companies aren't likely to follow through on this threat. But it's the thought that counts. And surely there will be a few who decide that screwing their managers is good business, and I expect we'll hear about every last one of them.

Don't listen. In this case, anecdotes are just propaganda tools. In a year or so the Department of Labor will provide us all with comprehensive statistics on what happened, and then we'll know. Until then, just enjoy the good news.

UPDATE: This post originally said federal law required overtime pay for working more than 8 hours in a day. That's true in some states, including California, where I live, but it's not federal law. The post has been corrected.

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Health Update Update

| Mon Jun. 29, 2015 11:49 PM EDT

As you may recall, the key thing my doctor—and I—would like to see on the multiple myeloma front is a big drop in my M protein level, a marker for cancerous plasma cells. Today we got the latest results, and it's up to 0.9. Since the first round of chemotherapy had already gotten it down to 1.0, what this means is that the entire second round of chemotherapy at City of Hope was basically useless. I didn't respond to it at all.

We went ahead with the biopsy today anyway, for reasons that are a little vague to me. Apparently it will give us some indication of where the cancerous cells are, but the results won't have any impact on my treatment plan. In a couple of days I'll start on a low daily dose of Revlimid, in hopes that it will get my M protein level down to zero. If it doesn't, then we'll try a higher dose.

Revlimid is a highly controlled substance because it's in the same family as thalidomide and can cause serious birth defects. You cannot just pick it up at your local pharmacy. First, you have to fill out a lengthy form, and the medication is then mailed from a central location, presumably in a plain brown wrapper or something. As near as I could tell, pretty much every question on the form was some variation of me promising not to even think about getting anyone pregnant while I'm taking it. As you can imagine, this is not really an issue, so the form turned out not to be too much of a chore after all. It was just OK, OK, OK, OK, etc. I promise.

So that's it for now. Not exactly cheery news, but the buildup of cancerous cells in my bone marrow is not actually that heavy (about 5 percent or so), which means there's a decent chance the Revlimid will be enough to keep it under control. We'll know in a couple of months or so.

Health Update

| Mon Jun. 29, 2015 1:30 PM EDT

This is probably it for blogging today. It's biopsy day for me, and unfortunately this is up in LA, so it's going to wipe out most of the day. The good news is that this is the last of the tests for now, and in a week or two we'll know for sure how well I responded to the second-round chemo up at City of Hope. Whether that turns out to be good news or bad is the million-dollar question.

In the meantime, I'm feeling pretty good. I bought myself a Surface 3 yesterday as part of my tablet collection hobby. It's my fourth in four years. I now have an iPad, an Android tab, and two Windows tabs. Since I don't spend a lot of money on anything else, I figure it's actually a fairly harmless and cheap hobby.

Seems to be OK so far with a few odd quirks. But I've not yet been able to answer my key question: how well does Firefox work? Their servers appear to have been down for maintenance since last night, so I'm unable to sync the new tablet. Until then, it's basically a brick since Firefox is about half of what I do with it. Maybe the Mozilla folks will have their servers back up and running by the time I get home.

Court Rules EPA Must Consider Cost in Regulation of Power Plants

| Mon Jun. 29, 2015 11:51 AM EDT

In today's EPA case, the question at hand was whether EPA has to consider both costs and benefits when it makes the decision to regulate power plants. EPA says it has to consider only benefits during the initial decision, and can consider costs later when it writes the actual regulations themselves.

The conservative majority on the Supreme Court disagreed. Although the Clean Air Act generally requires EPA to regulate sources that  “presen[t] a threat of adverse effects to human health or the environment," the requirements for regulating power plants are different. EPA can only regulate power plants if it finds regulation "appropriate and necessary."

So what does that mean? "There are undoubtedly settings in which the phrase 'appropriate and necessary' does not encompass cost," the majority opinion says, "But this is not one of them." Then this:

EPA points out that other parts of the Clean Air Act expressly mention cost, while [the power plant clause] does not. But this observation shows only that [the power plant clause's] broad reference to appropriateness encompasses multiple relevant factors (which include but are not limited to cost); other provisions’ specific references to cost encompass just cost. It is unreasonable to infer that, by expressly making cost relevant to other decisions, the Act implicitly makes cost irrelevant to the appropriateness of regulating power plants....Other parts of the Clean Air Act also expressly mention environmental effects, while [the power plant clause] does not. Yet that did not stop EPA from deeming environmental effects relevant to the appropriateness of regulating power plants.

As it happens, this is not entirely clear. The origin of the phrase "the exception proves the rule" applies to this. If I say that parking is not allowed on 4th Avenue on weekdays, this implicitly means that parking is allowed on weekends. The fact that I made a specific rule and deliberately failed to include certain cases in that rule, means that the rule doesn't apply to the excepted cases.

In this case, cost is specifically mentioned elsewhere in the Clean Air Act, but not here. So power plants appear to be an exception to the general rule that cost has to be considered from the very start. This means that the question is whether "appropriate and necessary" encompasses cost, or whether Congress would have specifically mentioned cost if it wanted it considered.

The conservative majority decided cost was inherently part of that phrase. The liberal dissenters disagreed. The conservatives won.

This Will Probably Not Be a Very Fun Week

| Mon Jun. 29, 2015 10:41 AM EDT

This week's news to watch for:

  • Greek talks have broken down and they might be about to leave the euro, causing chaos.
  • Negotiations with the Iranians have hit a pretty rough patch. There may be no nuclear deal after all.
  • Puerto Rico has effectively declared bankruptcy.
  • China's stock markets, which have been falling already, are off a cliff today. "China’s main stock index entered bear-market territory Monday," says the Wall Street Journal, "as a surprise interest-rate cut over the weekend failed to lift the market amid concerns over investors’ debt levels, while uncertainty about Greece shook sentiment elsewhere in the region."
  • And in non-financial bad news, the Supreme Court has a couple of important cases coming up this week. The smart money suggests that the liberal run of good luck in the high court may be over. Fasten your seat belts.

POSTSCRIPT: It's already happening. The Court has just upheld lethal injection procedures for executing death-row inmates and has struck down EPA rules on toxic emissions. On the brighter side, they ruled that independent commissions can draw district lines. So liberals are 1-2 so far this week.